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Vivid: More Gear To Detect Bombs

March 09, 1997

Inside Wall Street

VIVID: MORE GEAR TO DETECT BOMBS

On Monday, Feb. 24--the day after a gunman opened fire atop New York's Empire State Building--shares of Vivid Technologies (VVID) jumped nearly 3 points, to a new high of 24 1/2. Why? Vivid is a big maker of automated inspection systems for airline luggage that can detect plastic, other explosives, drugs, and currency.

Vivid's stock had been red-hot even before the Empire State tragedy. It jumped from 10 in mid-December to 20, breaking analysts' price targets. So when the stock flew to 24 that Monday, some analysts downgraded it from a buy to a hold, based purely on the fast rise. That pulled the stock down--back to 21.

"The stock has become even more of a buy at this level," says investment manager Robin Kerr of Axe-Houghton Associates in Rye Brook, N.Y. "Let's face it," she says. "Weapon-detection systems will become more a part of our lives."

Kerr and analysts note that on U.S. domestic flights and most world airports' international flights, none of the baggage is subjected to screening for explosive material. The X-ray system that currently scans carry-on baggage isn't capable, she says, of detecting explosives--only weapons.

Vivid's gear automatically identifies and isolates explosives in luggage that passengers check in at airport counters. Vivid's systems are in use at 75% of airports that deploy integrated automated-detection devices, including London's Heathrow and Gatwick and Paris' Charles de Gaulle. No such systems are in use in the U.S.

"Vivid has sold nearly 150 systems for installation in airports throughout Europe and in Asia," says Glenn Hanus, an analyst at Needham & Co., a New York investment firm. By September, Vivid expects to have 200 of its devices installed. Order backlogs were $24 million as of the end of 1996.

Kerr figures that Vivid will make 60 cents a share this year and about $1 in 1998, vs. last year's 15 cents. Those estimates don't include the potentially huge U.S. market or future sales of Vivid's hand-carry detection gear. Kerr believes the stock will hit 30 this year.BY GENE G. MARCIAL